In the past, Initial Public Offerings as a profitable investment type were only available to big funds or elite customers of major brokerage firms or banks and it was hard (almost impossible) for retail investors to gain access to IPOs. You couldn't buy shares paying the price set by the company and you had to wait until the shares actually start trading on the public stock market.
Luckily, technologies and marketplaces changed the rules of the game, now average investors can participate in IPOs. Brokers adjusted accordingly, making access to IPOs more affordable now.
How to Buy IPO Stock at Its Offer Price
- Check the IPO details. Always Do Your Own Research (DYOR) for the company that is going for IPO first.
- Find a broker. You need a broker that can provide you access to the IPO. In each IPO profile on IPObase we integrated a special tool that helps to match investors with available IPO brokers in their area. Just click "Find IPO broker" button.
- Check eligibility criteria. Each broker has its own eligibility criteria, like account minimum which can vary widely
- Create trading account. For KYC you need to prepare your identity document and a document confirming the address of residence (utility bill).
- Deposit your account. To participate in an IPO, your account must have available funds in the amount you send IPO application for.
- Request shares. Assuming you meet the requirements for participating in an IPO, your next step will be to request a certain number of shares in the IPO. You may not be allocated all the IPO shares you offer to buy.
- Wait for allocation. The actual number of stocks purchased during an IPO depends on supply and demand. The higher underwriter reserves the right to partial execution of collective applications. So if the demand is high you may get less than you applied for. Of course, you will only pay for the shares purchased. The rest of the funds will be returned to your account.
Note: Many IPO purchases come with a lock-up period, usually 90 or 180 days. You will not be able to sell your shares until this period expires.
How to Invest After the IPO at Its Opening Price
The most conservative way to buy stock would be to wait for the IPO and buy the shares on the public stock market. You can do this through a brokerage account or a trading app. Though, you won’t get in at the low price offered by pre-IPO.